Comments on: Bubbles

By: Doug

Doug — Tue, 01 Dec 2009 20:00:20 +0000

“it is modernisation compared to most of the rest of the Muslim … world”

Turkey being the biggest exception.

By: Barry

Barry — Mon, 30 Nov 2009 20:05:10 +0000

Michael: “city of half-empty apartment houses and office buildings”

Dave: “Prices will fall and eventually they will be filled. It is a rich region that imports and lot of goods, services, and capital equipment, and Dubai if it weren’t so expensive it would again be an ideal location for Western businesses to locate.”

However, if money was borrowed at the height of the market to build these buildings, that means that they won’t be filled at prices which will pay for their construction. Which is cool if you happened to sell some otherwise useless land at inflated prices, but not so good otherwise.

“… an ideal location for Western businesses to locate.”

From some recent articles, it’s far from ideal; the legal environment is highly corrupt and bad; especially for foreigners. This will matter even more now, as Dubai tries to unwind things; right now it looks like a place where being in debt is an imprisonable (and probably torturable) offense for foreigners, but that connected locals might be much more free to default.

By: Benny Lava

Benny Lava — Mon, 30 Nov 2009 01:02:36 +0000

“like prostitutes, nightclubs, uncensored internet access, and social intercourse among unmarried men and women”

You forgot one: alcohol! Drinking booze is forbidden in Islam. And while we are on the topic, here is another: usury. Charging interest is against Islam as well.

By: dave schutz

dave schutz — Sun, 29 Nov 2009 12:38:47 +0000

“..built on its own growth and no actual local source of primary value..” zowie. When I think about it, that’s a nice polar-extreme statement of the direction the US was going, and for which we are paying now. We do actually have farms & forests & airplane factories, but Vegas sounds a lot like Dubai. Phoenix, too.

By: Dave

Dave — Sat, 28 Nov 2009 22:22:33 +0000

“city of half-empty apartment houses and office buildings”

Prices will fall and eventually they will be filled. It is a rich region that imports and lot of goods, services, and capital equipment, and Dubai if it weren’t so expensive it would again be an ideal location for Western businesses to locate.

By: Michael O'Hare

Michael O'Hare — Sat, 28 Nov 2009 17:29:31 +0000

James, point taken about the trading history. But they forgot it all. Traders have to be aware of supply and demand, treat debts as real obligations, and be sure their inventory has someone they can sell/ship it to. Dubai’s government has borrowed money to build a city of half-empty apartment houses and office buildings (vacancy rates hover around 50% now and lots more space is coming on line) that can’t be put on a boat and sold on, in a place no-one wants to be in most of the year, and providing no really unique competitive advantage as commerce has less and less to do with physical movement of large, heavy stuff. Arabs have no trouble setting up in London or Paris, and Dubai’s present advantages are easily seized by Qatar or lots of other places. Contrast Singapore, whose investment is in an educated, entrepreneurial, corruption-allergic, multilingual population (yes, and a well-situated extremely efficient transshipment port), and bricks and mortar appropriate to its needs.

By: horseball

horseball — Sat, 28 Nov 2009 16:09:04 +0000

Mens watches have always been a substitute for jewelry. Calvin banned jewelry for men, and that’s why the watch industry started there.

Dubai functions in an analogous way to Switzerland, which exists only because it is neither France nor Germany, and creates regulatory arbitrage with its neighbors. (Which might be a stilted way of saying that they allow drinking and hookers, alongside possibilities for tax evasion.) It is my impression (from having been there) that these are not offered as a concession to westerners, but for the Saudis.

By: James Wimberley

James Wimberley — Sat, 28 Nov 2009 12:20:08 +0000

M O’H: “…a small tribe (now numbering about 300,000) of pearl fishers and date-palm cultivators…” And gold smugglers to India. Dubai creek was a port before it got ambitions to become a global entrepot and trade hub. I’m not so sure that the idea is as stupid as all that. It assumes the Saudis will always stay that bit more reactionary, so Dubai can provide services not available in Riyadh.

More important, Dubai’s (and the UAE’s) model of modernisation in a Muslim country is weird and fragile, but it is modernisation compared to most of the rest of the Muslim, and especially the Arab Muslim, world. Qatar’s Al Jazeera isn’t to everybody’s taste, but it is a genuine news organisation, not an unwatchable propaganda outlet. I reckon Dubai should be given temporary help if necessary.

By: DCA

DCA — Sat, 28 Nov 2009 05:57:00 +0000

On watches: quartz had effectively supplanted mechanical by 1980 (see David Landes’ Revolution in Time). The Swiss went over to watches-as-fashion: at the low end the Swatch, at the high end the kind of over-the-top mechanical designs you wrote about. I think these are best regarded as the exact equivalent of jewelry–but socially acceptable for males in a way that diamond necklaces still are not. Any nominally utilitarian aspect is really just for show, like the quality and size of gemstones. So I’d expect high-end watches to be like other luxury goods: down for a while, then back up, and not really a bubble. Certainly not anything to parallel Dubai, which must be giving the rest of the UAE plenty of heartburn.

By: H. Shah

H. Shah — Sat, 28 Nov 2009 04:30:46 +0000

Ah, targeted internet advertising. Every single ad on this comment page is currently plugging hotels in Dubai. Kids eat free and the internet is free too!

Somehow, it just isn’t appealing.

By: ThomasH

ThomasH — Sat, 28 Nov 2009 00:06:39 +0000

Schadenfreud has never been so much fun.